French privatisation row explodes

French government
French government

French has been brought to a standstill by public sector strikes opposing the new government’s privatisation plans, which could cause mass redundancies and the loss of employee benefits.

The government wants to use the money from privatisation to cuts taxes and reduce spending, something promised by the conservative Jean-Pierre Raffarin, before being elected prime minister in June.

But the commitments were made as sluggish economic growth was eating into tax receipts.

Constricted by the European Stability and Growth Pact, which allows a budget deficit of no more than 3% of GDP, the government urgently needs to raise money elsewhere.

During the election, the centre-right campaigned aggressively for privatisations, eyeing the cash that could be raised.

Workers’ fears

French unions do not quite see it the same way, fearing tens of thousands of redundancies and cuts to pensions as state industries fall into the hands of the financial markets.

Public sector workers protested on 3 October in the first major challenge to the plans being implemented by finance minister Francis Mer.

The latest strikes come after truck drivers tried, but failed, to blockade the country on Monday in a dispute over wages.

The government, which said it was not prepared to see the economy suffer because of the dispute, feared if the truckers’ demands were met, it would spark similar ones from public sector workers.

French interior minister Nicolas Sarkozy had said “we will not accept paralysis” and instructed police to act accordingly.

Industrial unrest contributed to the defeat of the last right-wing government in 1997, which led to five years of socialist rule.

French government
French government

Sell-off plans

Workers from the railways, postal services, France Telecom, the Paris Metro, air traffic controllers, and civil servants have all joined the latest strike.

Unions have also called strikes at schools, social security offices, unemployment agencies, government ministries and state-run energy companies Electricite de France (EdF) and Gaz de France (GdF).

The government, wary of provoking this reaction, had already promised to preserve state pensions and retain majority stakes in both energy companies.

But it is expected to cut a 54% stake in Air France to 20%, and open up the postal service, La Poste, to competition by 2009 as required by European laws.

France Telecom, which has huge debts totalling about 70bn euros (£44.5bn; $70bn), is also on the privatisation list, with the government looking to cut its 53% stake.

It has been under pressure to privatise EdF, which has expanded aggressively abroad while excluding competition from the domestic market, but the European Competition Commissioner Mario Monti has said he is “indifferent” to whether it is sold-off.

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